Q&A: Tony Ng, Vice President, APAC, DigiKey Electronics

Industry veteran Tony Ng, Vice President, APAC at DigiKey Electronics, shares his insights with What's New in Electronics about the market challenges facing the electronics industry and the opportunities that DigiKey Electronics has observed — including his thoughts on ongoing supply chain turbulence and other recent trends.

Is 2023 set to be a profitable year for the Australian and New Zealand electronic components market?

DigiKey is looking at 2023 as an investment year where we are preparing for the next cycle of future growth. This is true in all global regions, including Australia and New Zealand. We are witnessing a huge amount of innovation this year and know that it will be a big year for new product launches, and we’re thrilled to help support that growth in the Australia and New Zealand regions.

From an Australian/New Zealand point of view, we are seeing changes in the market. In the last two years, design engineers/buyers were looking for alternative parts to make their designs with so that they could continue their manufacturing.

But with the market getting back to normal right now, more and more activities are coming back to innovation. And that’s why continuing to bring in new suppliers and increasing our SKU count remains at the top of our focus.

The threat of recession looms over the market as inflation continues to rise. Do you believe that the high degree of uncertainty around the ongoing recession could have a significant impact on the electronic components market over the next few years?

While there’s been a downturn in smartphone and PC demand over the last couple of years, many suppliers are still very confident in the other industries. There’s a need for products in data centres, industrial, automotive, medical and aerospace. The supply to those five specific areas will continue to grow and there will be demand.

As a distributor for electronic components and automation products, DigiKey has been in a unique position during the pandemic. Overall, our industry has been in an upcycle and now, along with the rest of the world, we’re looking at a downturn. However, while we may be in a slower growth period, at DigiKey we don’t pull back during these times, we build for the next cycle understanding it’s exactly that, just a cycle.

In my business development role, I have the opportunity to talk to and hear from customers, suppliers and rep organisations. So, I’m going to share what I’m seeing and hearing from people who have been on the frontlines of the industry.

Over the past 40 years, the semiconductor industry has gone through many cycles, just like any industry. While the past three years have felt anything but average, when you look at the last upturn cycle, or when billing overall was going up, it was actually pretty average.

On the flip side, since October 2022, the United States has been in a downturn. In contrast to the upcycle, this downturn has been more dramatic than previous downturns. The only downturn during the last 40 years that’s been stronger has been the one coming out of 2018.

What industry trends are you most excited about in 2023? What industry challenges does the company anticipate for the latter half of the year?

Wireless connectivity, industrial automation and electrification, smart sensors, cross architecture solutions and rapid prototyping will all be key trends this year. In the past year alone there has been a surge in new product introductions in every industry from automotive to medical, industrial automation to consumer devices and everything in between, driving business across the board.

I wouldn’t call them challenges but there are always opportunities to improve our customers’ experience to feel more local in the 180 countries where engineers and purchasing professionals engage with us. We want everything from the search, ordering and payment processes to be as frictionless as possible.

How has the rising popularity of the Internet of Things following the pandemic impacted DigiKey’s range of product offerings?

IoTe stands for IoT enabler and at DigiKey, that’s where we can make the biggest impact with our customers. With 20+ years of experience in this realm, we're bringing the pieces of IoT together to make that ecosystem more accessible for our customers. We also know this technology continues to evolve, and quickly, and may look completely different in two to three years. That’s how fast this technology is changing, and the architecture continues to evolve.

We see a great opportunity for DigiKey to provide guidance in a complex space, simplifying IoT and making the IoT ecosystems work for our customers. We’re working hard to identify where there are opportunities so we can help our customers navigate what IoT will look like tomorrow.

At DigiKey we’ll continue to offer IoT-relevant products and services including hardware, software, cloud and connectivity solutions. We are working hard to bring together innovative and relevant technology that integrate to empower our customers to build, develop and deploy complete solutions.

Which countries do you think will see the most growth in electronic component manufacturing in 2023 and beyond?

Overall, we’re seeing strong growth in the Eastern Europe region, especially in Poland. Australia and New Zealand are also both up this year, as is India.

In what ways will DigiKey continue to support engineers in Australia and New Zealand?

Beyond the products that drive technology innovation, DigiKey supports engineers in Australia and New Zealand with a wealth of digital solutions and tools to make their jobs more efficient. For ANZ, driving the digital transformation of our technical support model as well as promoting our B2B solution and service capabilities also remain as the centre of our regional strategy development.

For engineers, DigiKey also offers:

• Our Tech Forum to help address FAQs from engineers.
• Parametric search to help engineers on technologies and product selection.
• An alternative sourcing tool which can help engineers and buyers with their design and purchasing needs.
• The PCB builder, which goes beyond electronic components and can effectively support ultra/small volume demand.
• Datasheet and EOL info to support engineering from fresh design through legacy production demand.
   

Last year we officially opened the doors to our 2.2 million square foot Product Distribution Centre expansion (PDCe) which will allow DigiKey to scale capacity to keep up with skyrocketing demand.

We frequently invest in technology and innovations that help connect us more automatically and electronically with our customers and suppliers, such as Advance Shipping Notifications (ASNs) which provide real-time, automated updates to the DigiKey system about when product will be shipping. This provides the most up-to-date information from our supplier partners to our customers.

Visibility to real-time movements of both inbound and outbound shipments is critical to replenishing stock and ensuring customers receive orders on time. Visibility into costs is also becoming even more important than ever before as shipping costs are increasing. If it’s possible to pivot and find a less costly and faster way to ship, we’ll find it.

DigiKey was recently awarded 17 recognitions from its supplier partners during the 2023 EDS Leadership Summit and was recognised for its sales results and breadth of products. In what ways does DigiKey plan to engage with its suppliers to support engineers and designers going forward?

We are coming off a great couple of years where we experienced more than 80% growth over the past two years thanks to tremendous support from our 2400 supplier partners. We continue to nurture our strong relationships with our suppliers and engage on a regular basis to understand their evolving needs, challenges and goals. This open communication allows for collaborative problem-solving and brainstorming to help our mutual end users, the engineers and designers, to receive the best possible quality and breadth of product.

DigiKey invests significant time and effort in building trust, demonstrating reliability and honouring our commitments to suppliers to solidify our relationships. We also seek opportunities to provide value-add services like sharing market insights, offering training and educational resources and content, and implementing efficient supply chain solutions for our suppliers. By nurturing these relationships, not only do we ensure a reliable, diverse and broad range of high-quality products, but it also establishes a network of trusted partners who can collectively adapt and support customer needs in an ever-changing business landscape.

In 2022, DigiKey expanded its portfolio by adding 550 new suppliers across its core business. Does the company have any plans to introduce new suppliers to its range in 2023?

Absolutely, in fact we just announced in June that we added 175,000+ new SKUs already this year, coming both from existing and new suppliers on our line card. While there is no single industry or application driving significantly high impact or growth, we are excited to see the unstopped innovation and demand for new technologies right now. Out of the 500+ new suppliers and 75K+ new SKUs introduced last year, we continue to see ANZ being one of the first regions selecting them.

And as a region, ANZ continues to search for new products to support a wide scope of industries which complement our supplier and product expansion strategies well.

Which market segments (automotive, communications, industrial, military, etc.) do you believe will present the biggest growth opportunities for DigiKey, in 2023 and beyond?

The emergence of modules and semi-finished products is generating new opportunities for us. This also gives another reason to engineers that DK’s platform is a great platform for sourcing given the high speed of supplier and SKU additions. Out of the 500+ new suppliers we have been adding in the past years, the majority are module makers. We continue to listen to our customers’ voices and watch out for new technologies. With the completion of our PDCe, we now have even more space to house these products.

Looking ahead, what is DigiKey’s capital investment priority for 2024?

Driving our growth will be our continued investment and focus on inventory and NPI, exploring and entering new markets and geographies, supplier services (such as hosted cart) and growing our eCommerce capabilities.

Tony Ng is responsible for driving digital engagement with customers across Asia and Pacific countries. He leverages Digi-Key’s capabilities — product breadth, stock availability, superb customer service, connectivity and supply chain solutions — to help customers reach a new level of efficiency. With more than 20 years of electronics industry experience, and over a decade spent with DigiKey, Ng can speak to a variety of topics within the electronics industry.